With the Thanksgiving festivities, I missed this piece of news regarding Arizona lawmakers seeking a rate cap on adjustable rate mortgages. According to the EV Tribune (Nov 23rd, 07):
Arizona’s chief financial regulator may ask state lawmakers to cap how much lenders can hike the interest on adjustable rate mortgages.
However, this is easier said than done becuase there is a provision which bars the legislature from impairing contracts.
Getting the measure through the Legislature might be the least of Rotellini’s problems: The state constitution has a specific provision barring enactment of any “law impairing the obligations of a contract.†And the mortgage deals signed by borrowers are contracts.
In other major subprime news, the Wall Street Journal reports a Bank of America estimate that “$362 billion worth of adjustable-rate subprime mortgages” will adjust next year. This means the mess is only halfway through. Read the full WSJ article for details (hat tip John Wake, Arizona Real Estate Notebook).